Andhaira, I have studied enough of business and entrepreneurship to explain why developers don't publish their own games.
Game development involves huge sunk costs and a long operating cycle. Sunk costs are expenses that are not recoverable. There will be many sunk costs in the early stage of development, because no developer commits itself to a project immediately. There is a conceptual stage and a testing stage, and if the project proves unfeasible, it is abandoned. Many projects are abandoned just like that. Minimum financing is provided at this point and it's mostly the developer's own financial resources that get flushed into it.
Now, once they give a green light to their own project, they need to use this project to generate enough revenues to cover those sunk costs themselves. Moreover, throughout the stage of development, there will be a long stage of cash outflows, and due to the long operating cycle i.e. a long time between the development of their product and its sale as a finished good - there is a high working capital requirement already commited to the project.
A developer's ability to generate revenues on its project will be based on the quality and the features of the actual product, and this will be a cost that they will be directly able to recover. And it will be these revenues that will cover all the initial sunk costs of the developer. But the margin on those revenues to cover those sunk costs will only be reduced by any other additional costs. Hence non-core functions must be outsourced to an outsider - hence a publisher.
Moreso, a developer undertaking publishing activities will increase the entire scale of operations of the enterprise, expanding it beyond merely the development of the project to the marketing and publishing of it - meaning additional capital requirements to fund those activities, including both fixed costs in a department to undertake this activity and working capital for keeping it running. And this ties in more capital into an enterprise which is already high on capital requirement.
Now, the sales of the product will depend on its quality and features, which are the focus of the development unit. Since it depends on those factors, additional capital in a marketing and publishing units will not increase the sales of it, meaning that there is a drastically reduced return on capital, which is further slashed down by the increased debt service coverage from the increased financing, leaving them with less money to cover the long running development costs, let alone the costs remaining marketing and publishing units, and let alone even the original sunk costs that were dumped into the company in the first place.
So, they need to outsource these incidental functions to an outsider, so they can work with less capital, and make stronger returns with it, so that they will be in a better position to cover the sunk costs and costs of the long running operations.
